A labor market is divided into two segments. All workers have the same qualifications and find jobs in either segment equally attractive. Initially, both segments are in competitive equilibrium. Then the development of worker prejudice that reduces the hiring of minorities in one segment can lead to a
a. permanent increase in labor supply in the discriminating segment
b. permanent increase in labor supply in the nondiscriminating sector
c. temporary change in the composition of labor in both segments which will revert back to an equal distribution of workers eventually
d. temporary increase in labor supply in both segments
e. temporary change in wage rates in both segments
B
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Banks deal with problems of adverse selection by
A) charging high interest rates. B) gathering information about the default risk of borrowers. C) making only short-term loans. D) making only long-term loans.
The notion that the central bank should set its federal funds target by a formula that puts weight on both output and inflation gaps is known as ________
A) the Taylor rule B) the constant growth rate rule for money C) the equation of exchange D) the Lucas rule
"There is a direct relationship between economic growth rates and the wealth of a nation." Do you agree or disagree? Why?
What will be an ideal response?
If government-assured medical and other benefits increase the labor costs, everything else remaining constant, then firms will tend to hire more of the other resources instead of labor
a. True b. False Indicate whether the statement is true or false